Now that Alaska is in a budget crunch due to the drastic fall in oil prices, the state needs to take another look at its so-called Film Tax Credit program to determine if the returns are worth the investment. Even if the state were not in a fiscal crunch, this program should be reviewed for its benefits to Alaskans. So let’s call this an opportunity to cut this costly program and place it on the cutting room floor.
We have heard much about Alaska’s film tax credit incentive (aka subsidy) and whether or not it benefits the State as a whole or only special interests. Forty states offered similar tax credits in 2010. Many of these states have now abandoned these credits because they do not create the promised jobs for their citizens. The glamour and Hollywood hype are there but are the financial benefits?
Here’s a quote from the LA Times:
“The Massachusetts Department of Revenue estimated that for every dollar of film tax credits awarded, the state got back only 13 cents in revenue from 2006 to 2011. The net cost to the state was $128,575 for every film job created for a Massachusetts resident.
Michigan, New Mexico and most recently North Carolina have scaled back their incentive programs in one way or another over concerns the cost to taxpayers outweighed the economic benefits.
North Carolina lawmakers recently decided to drastically reduce film incentives on the heels of a state report that found $30 million in tax incentives led to the creation of just 55 to 70 new jobs in 2011.” (emphasis added)(LA Times, Aug 30, 2014).
The Legislature needs to closely audit the investment and the returns for our economy and strongly consider following the lead of other states who have abandoned the program. The Tax Foundation’s Joseph Henchman has reviewed the status of these credits and reports that many states have abandoned them. (read more...) Should Alaska?